In Chekhovs play Uncle Vanya, Alexander Vladimirovitch Serebryakov, a retired professor, but apparently not of economics, calls

Question:

In Chekhov’s play Uncle Vanya, Alexander Vladimirovitch Serebryakov, a retired professor, but apparently not of economics, calls his household together to make an announcement.

He has retired to his country estate, but he does not like living there. Unfortunately, the estate does not derive enough income to allow him to live in town. To his gathered household, he thus proposes the following:

Omitting details, I will put it before you in rough outline. Our estate yields on an average not more than two percent, on its capital value. I propose to sell it. If we invest the money in suitable securities, we should get from 4 to 5 percent, and I think we might even have a few thousand roubles to spare for buying a small villa in Finland.

This idea was not well received by the household, especially by Uncle Vanya, who lost it for a while and tried to kill Professor Serebryakov, but no one pointed out that this was bad economics. As discussed in the text, if you buy a bond and interest rates rise, the price of your bond falls. What Professor Serebryakov does not realize is that what he is calling the capital value of the estate, on which he is earning 2 percent, is not the value for which he could sell the estate if the interest rate on “suitable” securities is 5 percent. If an investor in Russia can earn 5 percent on these securities, why would he or she buy an estate earning only 2 percent? The price of the estate would have to fall until the return to the investor was 5 percent. To make matters worse, it may have been that the estate was a riskier investment than the securities, and if this were so, a return higher than 5 percent would have been required on the estate purchase to compensate the investor for the extra risk. This would, of course, lower the price of the estate even more. In short, this is not a scheme by which the professor could earn more money than what the estate is currently yielding. Perhaps had Uncle Vanya taken an introductory economics course and known this, he would have been less agitated.